A statement of changes in working capital assists us in locating where such changes took place. In the first example we try to demonstrate the increase or decrease in particular items and then try to categorize them in terms of decrease and increase in working capital. As working capital is measured through subtracting current liabilities from current assets, any raise in current assets and any reduce in current liabilities demonstrates a raises in working capital. Likewise, reduce in current assets and a raise in current liabilities represent a decrease in working capital.

 The statement of changes in working capital as Table no.1 explains that the raises in current assets amounted to Rs. 52 million, a main part of the increase occurring out of cash, inventory and receivable. Reduce in working capital came about mainly from the increased accounts payable, advances taken from customers and taxes payable. Total amount of reduce in working capital resulting from raise in current liabilities amounted to Rs. 25 million, hence showing a net raise in working capital of Rs. 27 million.

TOLLS INDIA LTD.

Statement of changes in Working Capital for the year ending December 31, 2000

                  (Rs. In Millions)